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Weighted Average Cost of Capital

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Calculate the weighted average cost of capital for the following firm: it has $200000 in debt, $400000 in common stock and $10000 in preferred stock. It has a 5% cost of debt, 13% cost of common stock, 11% cost of preferred stock and a 32% tax rate.

1. 7.29%
2. 8.65%
3. 9.82%
4. 10.24%.

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The solution calculates the Weighted Average Cost of Capital.

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